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Morgan Stanley Expects Home Prices To Increase Amidst Curbs

Despite the new housing curbs, Morgan Stanley expects home prices in Singapore to increase by up to 10 percent by end-2019 and to double by 2030, reported Bloomberg.

Morgan Stanley analysts expect the housing market to be underpinned by the city-state’s status as a global hub, faster economic growth, as well as demand from buyers of en bloc projects.

More: MAS checking impact of new property curbs

In fact, home prices in Singapore have been on the uptrend during four of five previous rate hike cycles.

“Contrary to common perception, we believe housing supply/demand dynamics remain favourable, and we anticipate a wave of capital inflows into the housing market,” said Wilson Ng and his colleagues in a note to clients. “Housing supply is still below historical averages and is set to fall.”

Their views were formed following a revisit of last year’s forecast that home prices in Singapore would double by the end of the next decade.

The government has underscored that the property curbs are aimed at achieving price stability as well as sustainable growth in line with the country’s economic fundamentals. With this, the analysts expect the government to intervene during both up and down-cycles, such that in the event prices fall, the government would relax some of the property cooling measures.

The government introduced eight rounds of property cooling measures between 2009 and 2013 when home prices soared 60 percent. In 2017, it partially removed the seller stamp duties, before re-introducing new curbs this year.

And since most of the cooling measures from the previous tightening cycle are still in place, there remains a wider toolkit for the government to stimulate the housing market if the need arises, said Morgan Stanley.

The city-state will also remain relevant as a global hub – which would help in attracting capital inflows to the property market.

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